Weekly Tax News – 13 September 2021

EU Finance Ministers discuss the future of taxation

EU Finance Ministers discussed Taxation in the 21st Century at an Informal Ecofin meeting in Slovenia, on Saturday 11 September. The discussion focused on the ongoing global reform of international corporate taxation. Ministers exchanged their views on the next steps to ensure consensus of all EU Member States on the remaining details of the two Pillars, as well as timely and effective implementation of the deal in the EU. “The member states are committed to further harmonisation that would lead to a final agreement on a global level”, according to a press release published at the end of the meeting. They also expressed their views on what would this new paradigm for taxation of multinational companies mean for the long-term EU tax policy.

G7 Finance ministers discuss global tax reform

Finance ministers from the G7 countries met online on Thursday 9 September to discuss global tax reform and make progress on technical negotiations. During the meeting, the US Treasury Secretary Janet Yellen expressed support for ongoing efforts to improve the international tax system and outlined the importance of swift implementation of the new system, according to a press release.

Estonia still not convinced by the OECD tax deal

Estonia still opposes the OECD tax reform deal, according to a press release published on Tuesday 7 September, after the Estonian Minister of Finance Keit Pentus-Rosimannus met with the U.S. Secretary of Commerce Gina Raimondo and the Secretary-General of OECD Mathias Cormann. “The deal forged at OECD in July is not entirely acceptable to us. It is too vague, with a number of details that could prove harmful to a small open economy such as ours. We do however hope that by October we have resolved the matter in a way catering for Estonia’s interests as well”, said the Estonian Minister of Finance. The new digital tax has Estonia’s full support but it’s the global minimum tax that the country opposes.

MEPs quiz experts on tax transparency

The FISC subcommittee of the European Parliament held a hearing on Tax Transparency on Thursday 9 September with several experts and stakeholders. Dalia Grybauskaité, Co-Chair of the High-Level Panel on International Financial Accountability, Transparency and Integrity (FACTI) presented a report published in February 2021. Eelco van der Enden, Member of the Board of Directors at Global Reporting Initiative (GRI), spoke about the GRI 207 tax standard. Alan McLean, Executive Vice President Taxation and Controller at Shell explained that his company issued in 2019 a first tax contribution report and said that being more transparent has bring a lot of benefits and strengthened trust in Shell. On the contrary, Michael Jaeger, General Secretary of Taxpayers Association of Europe said that only tax administrations in the countries concerned and active EU bodies should have access to tax information, otherwise it may harm competition. Moreover, MEPs asked for feedback on the recently approved EU legislation on country by country tax reporting and how the rules should be followed up.

European banks still booking profits in tax havens

Between 2014 and 2020, the amounts declared by the main European systemic banks in tax havens have remained stable at around 20 billion euro per year respectively, despite the implementation of EU rules on country-by-country reporting for the banking sector, according to a new study published on Monday 6 September, by the European Tax Observatory. The study’s authors also applied to the profits reported by European banks in tax havens a minimum taxation as foreseen in the international corporate tax reform currently under discussion at the OECD. The tax revenues generated would be in the range of 3 to 5 billion euro, with a minimum effective tax rate of 15%, they found.

Talks in the EU Council on VAT rates are progressing

The negotiations in the EU Council on the European Commission’s 2018 proposal to give Member States the freedom to set reduced, super-reduced and zero VAT rates are progressing “well”, according to a written answer of the EU’s Tax Commissioner Paolo Gentiloni to MEP Chris MacManus (The Left, Ireland) dated 7 September. Member States are now focused on a positive list of supplies to which the reduced rates may apply rather than on a negative list as in the original proposal, he said. The EU Council Working Party on Tax Questions will discuss the proposal on 15 September. The Slovenian Presidency is planning a possible policy debate on VAT rates for the Ecofin Council of 5 October.

The 6th VAT Directive under scrutiny of MEPs

The ECON committee of the European Parliament is assessing the implementation of the 6th VAT Directive. On Monday 6 September, Olivier Chastel (Renew Europe, Belgium) published his draft report, in which he concluded that the current EU transitional VAT system is “complex, fragile in terms of tax fraud (…) and it unduly generates significant risks for businesses”. According to him, it is high time to move towards a definitive VAT regime, based on the destination principle. Consequently, his report calls on the EU Council to adopt the 2018 directive proposal on the introduction of the detailed technical measures for the operation of the definitive VAT system.

S&D group calls for a European Net Wealth Tax

The S&D group in the European Parliament called for a coordinated action to agree a European Net Wealth Tax, in a letter sent on Thursday 8 September ahead of the September 15 State of the Union (SOTEU) speech of Ursula von der Leyen. Such a tax should include a high exemption threshold, thus targeting only the wealthiest European households, with strongly progressive rates across a series of tax brackets, it explained.